There is so much moving at this moment: all extraordinary, unusual, and record-breaking and the climate movement has a vital role to play in the discourse around energy gaps and prices. So, we at 350 will do our best to contextualize the economics and politics underpinning the barrage of headlines and data points around energy, climate, and conflict to provide another reference for the movement.
Today, the U.S. and the U.K. announced they will impose a ban on Russian fossil fuels (oil, gas, and coal), to be phased in over the coming months. Additionally, Europe is planning to cut its dependence on Russian fossil gas by 2/3rds this year. In the short term, Europe plans on using renewables, energy efficiency, and heat pumps to provide 37% of those cuts to Russian gas.
In the lead up to these announcements, fossil fuels have been on a wild price-rollercoaster. Fossil gas prices in Europe rocketed to fresh all-time highs above €345 per megawatt-hour on Tuesday, after a record-breaking assent last week. The graph looks like the famous hockey stick chart showing global temperature increase – relative stability followed by an out-of-control surge.
Gas isn’t the only fossil fuel on a price spike. Oil, at a decade-long high well above $130/per barrel (Brent), is experiencing price volatility not seen since the peak of the 2008 financial crisis. Even coal prices are way up.
So what’s going on? Why are all fossil fuel prices skyrocketing?
From the supply-side: Back in mid-2021 there was suspected Russian slow-walking of its gas supplies to Europe kicking off price increases. Now, there is a significant global rejection of Russian oil and gas (including today’s US/UK bans) leaving a huge gap in the market. Additionally, extreme weather has disrupted both transport and long-established seasonal patterns in how we buy and consume energy. From the demand side: one of the largest factors is the macro resurgence of demand as economies have boomed after Covid-19 lockdowns lifted.
As we talked about in our previous post, the fossil-fueled propaganda machine is working tenaciously to convince world leaders that more drilling and deregulation is the answer to opposing Putin and price spikes. More supply, they say, is always the answer to price increases. As Naomi Klein wrote recently,
“Within hours of the invasion, every planet-torching project that the climate justice movement had managed to block over the past decade was being frantically rushed back onto the table by right-wing politicians and industry-friendly pundits: every canceled oil pipeline, every nixed gas export terminal, every protected fracking field, every Arctic drilling dream. Since Putin’s war machine is funded with petrodollars, the solution we are told, is to drill, frack, and ship more of our own.”
The buzz phrase last week was “energy security.” Despite countless analyses pointing to the fact that the war in Europe was enabled by fossil fuel profits, the fossil fuel industry polished their Orwellian double speak to bolster their cause: War is peace. Ignorance is strength. Fossil fuels are energy security.
And right on cue, oil-soaked politicians are working overtime to rehash the old sentiment that the best way to ensure energy price stabilization is through government-sponsored drilling and mining – and as much deregulation as possible. We can drill for more oil if we don’t have to worry about spills and toxic water or air. Let’s not forget, direct subsidies for fossil fuels amounted to $760 billion in 2018, according to the International Monetary Fund. That will probably be considerably higher this year since the subsidy bill rises along with oil and gas prices.
But we are not fooled. We know the real reason why new – and old – fossil fuel infrastructure is being pitched as helping Ukrainians. This war has made expensive fossil fuel projects profitable, and the fossil fuel industry and their banks are determined to make the most of these high prices.
This time though, the “drill, baby, drill” narrative has a formidable competitor. There is a clear and compelling story being told about an energy economy, one that is not dependent on volatile oil and gas prices. A world where autocrats, fueled by fossil-wealth are irrelevant. A clean energy transition is inherently much more distributed and based on sources like wind and sun that are not subject to geopolitical crises.
When fossil fuel prices are high, there is an opportunity for the relatively lower prices of renewable energy to gain some ground. Of course, it’s not that easy. High oil prices mean more powerful oil companies, making more grotesque profits, pouring more money into politicians’ pockets.
Photo credit: Karissa Chandrakate
That’s where we come in. We can’t make this transition without big investment. Our job is to loudly and persistently demand a clean and just future from our governments. Current oil and gas prices are an indicator of a major moment for meaningful change and we’ve already seen this change in action: when people come together to push back against fossil fuel expansion and demand that the funds be invested in renewables. We’ve seen how powerful the voice of the climate movement is and now we need to continue to demonstrate to leaders that a transition to renewable energy is the only promising pathway to bringing about the world we want.